Critical Analysis: Tilly’s (TLYS) versus Hanesbrands (HBI)

Tilly’s (NYSE: TLYS) and Hanesbrands (NYSE:HBI) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Profitability

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This table compares Tilly’s and Hanesbrands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tilly’s 2.55% 11.03% 6.52%
Hanesbrands 0.96% 72.30% 10.04%

Analyst Recommendations

This is a summary of recent ratings and price targets for Tilly’s and Hanesbrands, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tilly’s 0 0 2 0 3.00
Hanesbrands 0 12 6 0 2.33

Tilly’s currently has a consensus price target of $17.00, indicating a potential upside of 48.08%. Hanesbrands has a consensus price target of $24.67, indicating a potential upside of 43.33%. Given Tilly’s’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Tilly’s is more favorable than Hanesbrands.

Insider & Institutional Ownership

46.9% of Tilly’s shares are owned by institutional investors. Comparatively, 98.8% of Hanesbrands shares are owned by institutional investors. 50.1% of Tilly’s shares are owned by company insiders. Comparatively, 1.1% of Hanesbrands shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Tilly’s and Hanesbrands’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tilly’s $576.90 million 0.57 $14.70 million $0.65 17.66
Hanesbrands $6.47 billion 0.96 $61.89 million $1.93 8.92

Hanesbrands has higher revenue and earnings than Tilly’s. Hanesbrands is trading at a lower price-to-earnings ratio than Tilly’s, indicating that it is currently the more affordable of the two stocks.

Dividends

Hanesbrands pays an annual dividend of $0.60 per share and has a dividend yield of 3.5%. Tilly’s does not pay a dividend. Hanesbrands pays out 31.1% of its earnings in the form of a dividend. Hanesbrands has raised its dividend for 4 consecutive years.

Volatility and Risk

Tilly’s has a beta of -0.24, indicating that its share price is 124% less volatile than the S&P 500. Comparatively, Hanesbrands has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500.

Summary

Hanesbrands beats Tilly’s on 11 of the 17 factors compared between the two stocks.

About Tilly’s

Tilly's, Inc. retails casual apparel, footwear, and accessories for young men and women, and boys and girls in the United States. Its apparel merchandise includes tops, outerwear, bottoms, and dresses; and accessories merchandise comprises backpacks, hats, sunglasses, headphones, handbags, watches, jewelry, and others. The company also provides third-party merchandise assortment in its apparel, accessory, and footwear product categories. It operates approximately 222 stores in 31 states. The company also sells its products through its e-commerce Website, tillys.com. Tilly's, Inc. was founded in 1982 and is headquartered in Irvine, California.

About Hanesbrands

Hanesbrands Inc. is a marketer of basic innerwear and activewear apparel in the Americas, Europe, Australia and Asia/Pacific under apparel brands, such as Hanes, Champion, Maidenform, DIM, Bali, Playtex, Bonds, JMS/Just My Size, Nur Die/Nur Der, L’eggs, Lovable, Wonderbra, Flexees, Gear for Sports and Berlei. The Company operates through four segments: Innerwear, Activewear, Direct to Consumer and International. The Innerwear segment focuses on core apparel products, such as intimate apparel, men’s underwear, women’s panties, children’s underwear, socks and hosiery. The Company operates in the activewear market through its Champion, Hanes and JMS/Just My Size brands. The Direct to Consumer segment operations include its domestic Company-operated outlet stores and Website operations that sell its branded products directly to consumers in the United States. The International segment includes products that primarily span across the innerwear and activewear segments.

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